Wiese v. Cach, LLC

• Decision Date: 17 August 2015
• Docket Number: 72090–2–I.,Nos. 71806–1–I,s. 71806–1–I
• Court: Washington Court of Appeals
• Parties: Jennifer WIESE and Candy Bradison, individually and on behalf of all other similarly situated, Respondents, v. CACH, LLC, a Colorado limited liability company; and Square Two Financial Corp., a Delaware corporation, Appellants, Suttell & Hammer, P.S., a Washington corporation, Defendant. Jennifer Wiese and Candy Bradison, individually and on behalf of all other similarly situated, Respondents, v. Cach, LLC, a Colorado limited liability company; and Square Two Financial Corp., a Delaware corporation, Appellants, Suttell & Hammer, P.S., a Washington corporation, Defendant.

189 Wash.App. 466

358 P.3d 1213

Jennifer WIESE and Candy Bradison, individually and on behalf of all other similarly situated, Respondents

v.CACH, LLC, a Colorado limited liability company; and Square Two Financial Corp., a Delaware corporation, Appellants, Suttell & Hammer, P.S., a Washington corporation, Defendant.

Jennifer Wiese and Candy Bradison, individually and on behalf of all other similarly situated, Respondents

v.Cach, LLC, a Colorado limited liability company; and Square Two Financial Corp., a Delaware corporation, Appellants

Suttell & Hammer, P.S., a Washington corporation, Defendant.

Nos. 71806–1–I

72090–2–I.

Court of Appeals of Washington, Division 1.

Aug. 17, 2015.

Benjamin J. Stone, Lewis Brisbois Bisgaard & Smith LLP, Seattle, WA, for Appellant.

Michael E. Withey, Law Offices of Michael Withey, Bradley Jerome Moore, Stritmatter Kessler Whelan, Seattle, WA, Drew Legando, Landskroner Grieco Merriman LLC, Cleveland, OH, for Respondent.

Bradley Park Thoreson, Foster Pepper PLLC, Samuel T. Bull, Foster Pepper PLLC, Bryce Clifford Blum, Attorney at Law, Bradley L. Fisher, Davis Wright Tremaine LLP, Ross Colin Siler, Davis Wright Tremaine LLP, Seattle, WA, for Other Parties.

Opinion

SCHINDLER, J.

¶ 1 Colorado limited liability company CACH LLC and its parent company Delaware corporation SquareTwo Financial appeal denial of the motion to compel arbitration of the claims alleged in a class action lawsuit. The class action complaint alleges CACH and SquareTwo engaged in a civil conspiracy and unfair and deceptive debt collection practices in violation of the Consumer Protection Act (CPA), chapter 19.86 RCW, and the Collection Agency Act (CAA), chapter 19.16 RCW. The complaint sought an award of damages and declaratory and injunctive relief. We hold that except for the claim that the judgments CACH previously obtained in the collection actions are subject to an action to vacate, the claims for civil conspiracy, violation of the CPA and the CAA, and declaratory and injunctive relief are subject to binding arbitration. Accordingly, we affirm in part, reverse in part, and remand for further proceedings.

FACTS

¶ 2 On October 24, 2005, Candy Bradison opened a credit card account with FIA Card Services NA (FIA). FIA is a wholly owned subsidiary of Bank of America Corporation. A credit card agreement governed the account. Bradison used the credit card to make a number of purchases. The last payment that she made on her account was on April 14, 2008.

¶ 3 On September 15, 2008, FIA assigned to CACH LLC, a Colorado limited liability company (CACH), all “rights, title, and interest” to the past due balance Bradison owed of $20,494.37.

¶ 4 In April 2010, the law firm of Suttell & Hammer PS filed a complaint on behalf of CACH to collect the unpaid amount Bradison owed on the account. Bradison did not file a notice of appearance or an answer. CACH filed a motion for entry of a default judgment and an order of default.

¶ 5 On June 18, the superior court entered a default judgment against Bradison in the amount of $20,494.37 plus $8,232.71 in interest, $299.50 in costs, and $650.00 in attorney fees.

¶ 6 On August 23, 2007, Jennifer Wiese opened a credit card account with FIA. A credit card agreement governed the account. Wiese used the credit card to make a number of purchases. The last payment she made on her account was on October 22, 2008. On March 17, 2010, FIA assigned to CACH all “rights, title, and interest” to the past due amount Wiese owed of $4,972.94.

¶ 7 In January 2011, the law firm of Suttell & Hammer filed a complaint on behalf of CACH to collect the unpaid balance Wiese owed on the account. Wiese did not file a notice of appearance or an answer. CACH filed a motion for entry of a default judgment and an order of default.

¶ 8 On January 26, the court entered a default judgment against Wiese in the amount of $4,972.94 plus $845. 19 in interest and $299.50 in costs.

¶ 9 On September 25, 2013, Bradison and Wiese filed a class action lawsuit against CACH and its parent company Delaware corporation SquareTwo Financial (SquareTwo).¹ The complaint defines the putative class as follows:

All persons in Washington state against whom CACH, Square Two, and/or Suttell & Hammer have taken any action in the name of CACH to collect a defaulted or charged off debt while not licensed as a collection agency in accordance with RCW 19.16 et seq.

¶ 10 The complaint alleges CACH “is a shell corporation” and a “wholly-owned subsidiary of ... Square Two, which operates CACH as its sole member.” The complaint alleges neither CACH nor SquareTwo were licensed as a debt collection agency under chapter 19.16 RCW and asserts claims for civil conspiracy and unfair and deceptive acts and practices in violation of the Consumer Protection Act (CPA), chapter 19.86 RCW, and violation of the Collection Agency Act (CAA), chapter 19.16 RCW. The complaint seeks an award of compensatory and exemplary damages and declaratory and injunctive relief. The injunctive relief request includes requiring CACH to move to vacate the judgments obtained in the collection actions, to notify credit reporting bureaus of the vacated judgments and request removal of adverse credit history, and to return to the plaintiffs the amount collected plus interest.

¶ 11 On December 13, CACH filed an answer to the class action complaint. CACH admits that it is a Colorado limited liability company with headquarters in Denver and that SquareTwo is its sole member. CACH asserts that “it has a number of authorized agents and authorized representatives who act on its behalf” and “there is a servicing agreement with SquareTwo.” CACH admits that it “purchases charged-off consumer credit card receivables (‘accounts') from original creditor banking institutions, among others.” CACH admits it “was not licensed as a collection agency at the time the respective suits were filed against Ms. Bradison and Ms. Wiese.” In all other respects, CACH denies the allegations in the complaint. CACH asserts a number of affirmative defenses including that “some or all ... of the putative class claims ... are subject to valid agreements to arbitrate.”

¶ 12 On December 24, CACH filed a motion to compel arbitration and dismiss the class action complaint. CACH argued the terms of the credit card agreement mandate arbitration of all claims alleged in the complaint. SquareTwo also filed a motion to compel arbitration and dismiss the complaint. SquareTwo argued it had the right to invoke the arbitration clause because it “is being sued as the parent of CACH and is facing identical claims as CACH.” SquareTwo “relie[d] upon and adopt[ed] the reasoning and analysis provided by CACH” in support of the motion to compel arbitration.

¶ 13 In opposition, Bradison and Wiese argued the language of the credit card agreement precluded arbitration of the claims alleged in the class action complaint. In the alternative, they asserted CACH waived the right to arbitrate by obtaining judgments in the collection actions.

¶ 14 The court denied CACH's motion to compel arbitration. The court ruled CACH waived its right to compel arbitration by previously obtaining judgments in the collection actions. “The court finds that CACH chose to pursue its claims by litigating the debt owed in a judicial forum rather than through arbitration, and thus, waived its right to now compel arbitration in the same forum.” Following supplemental briefing, the court ruled that as the parent company of CACH, SquareTwo is bound by “CACH's waiver.” CACH and SquareTwo appeal.

ANALYSIS

¶ 15 CACH argues the court erred in denying the motion to compel arbitration of the claims alleged in the class action complaint. CACH asserts the express language in the arbitration provision of the credit card agreement governs, and it did not waive the right to arbitrate the claims asserted in the class action lawsuit by obtaining judgments in the previous collection actions. We review the decision on a motion to compel arbitration de novo. Kilgore v. KeyBank, Nat'l Ass'n, 718 F.3d 1052, 1057 (9th Cir.2013) (en banc); Townsend v. Quadrant Corp., 173 Wash.2d 451, 455, 268 P.3d 917 (2012).

Arbitration Agreement

¶ 16 The credit card agreement states, “This arbitration agreement is made pursuant to a transaction involving interstate commerce, and shall be governed by the Federal Arbitration Act, 9 U.S.C. §§ 1 –16 (‘FAA’).” Under the FAA, arbitration agreements are “a matter of contract” and “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.”

AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 131 S.Ct. 1740, 1745, 179 L.Ed.2d 742 (2011) ;² 9 U.S.C. § 2. The FAA mandates that “courts shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed.” Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 218, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985).³

¶ 17 There is a strong presumption in favor of arbitration to “ ‘ensur [e] that private arbitration agreements are enforced.’ ” Mortensen v. Bresnan Commc'ns, LLC, 722 F.3d 1151, 1159 (9th Cir.2013) (quoting AT&T, 131 S.Ct. at 1748 ); see also Marmet Health Care Ctr., Inc. v. Brown, –––U.S. ––––, 132 S.Ct. 1201, 1203, 182 L.Ed.2d 42 (2012) (per curiam) (noting that the FAA reflects an “emphatic federal policy” in favor of arbitration).⁴ Because any arbitration agreement within the scope of the FAA “shall be valid, irrevocable, and enforceable,” “[a]ny doubts concerning the scope of arbitrable issues, construction of the contract, or a defense of delay, waiver, or the like should be resolved in favor of arbitration.” 9 U.S.C. § 2 ; Kinsey v. Bradley, 53 Wash.App. 167, 170, 765 P.2d 1329 (1989) (citing Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24–25, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983) ): see also Gandee v. LDL Freedom Enters., Inc., 176 Wash.2d 598, 603, 293 P.3d 1197 (2013).

¶ 18 In determining whether to...